Is the HSR development in Jurong a linear boost for property prices in the locality?
It was recently announced that the Singapore terminus for the high-speed rail link between Singapore and Kuala Lumpur will be in Jurong East, specifically at the site where Jurong Country Club is now situated. There could possibly be mixed-use developments, comprising office, retail, and entertainment-centric, lifestyle components.
It is without much doubt that the arrival of the HSR in Jurong Lake District will definitely boost property prices in the vicinity – Jurong East, Lakeside and even Jurong West. The price increase will however be unfolding itself only in the long term – as buyers will not accept radical lifts in property prices in the Jurong area at present, judging by how the cooling measures have instilled prudence in home buying. Compared to a year ago, rents of key condominium developments in Jurong East and Lakeside have dipped by about 5% to 8%.
Rents of non-landed residential properties in Jurong East and Lakeside (general decline over the year)
It should be more logical that nearer to the completion (about 3 years before the completion) of the station and rail line, we can see private residential prices to be higher by up to 10% from current levels. Rents will only rise notably upon the completion of the whole project, once the dust like the constructions and inconvenience is settled.
HDB flat prices will benefit more than private residential properties
The building of the HSR will definitely push up the area’s property prices in the long term. The first to benefit will be residential properties. This is because with the presence of the station, travelling to and from Malaysia will be much more convenient. For Malaysians who are working in Singapore and can afford a rental premium, they will rent a room in Jurong East or Lakeside. Otherwise, they will choose the more affordable alternative, which is Jurong West. The leasing demand can also potentially spill over into Bukit Batok. Already, buyers’ interest for HDB flats and resale private condominiums in Bukit Batok has improved or has been holding up amid the current cautious times , due to Jurong East’s successful renaissance.
It is unlikely that there will be more Malaysians working in Singapore who will buy a property in Jurong, as property prices may be quite high and beyond affordability, especially for blue collar workers. They will not be commuting on a daily basis back home to Malaysia, but can definitely travel back more often (e.g. every weekend or off days). Moreover, the train tickets are expected to be within budgets for weekly and non-daily occasional travel.
The high-speed rail link will push up property prices in the Jurong locality in the long term, and HDB flat prices are expected to benefit more than private residential properties.
This is akin to analogies in countries especially Taiwan whereby citizens go to city to work but travel back to suburbs (hometown) over weekends (e.g. Taipei where high speed rail and trains facilitate such travel back to other parts of Taiwan) – so we can expect Malaysians to be more willing to come to Singapore to work, and HSR will help them to go home back in Malaysia often, while they rent a room in homes in Jurong area. In Hong Kong, the MTR (Luo Wu station) makes travelling to Shenzhen possible. While a handful of HongKongers who work in Shenzhen (factories) do travel via MTR daily, there are many who have company bus transport arrangements, or if not, only return to Hong Kong on weekends and stay in Shenzhen in the weekdays. The reverse is almost the same for Mainland Chinese working in Hong Kong.
However, the HSR terminus in Jurong may have more noticeable benefits for HDB flat owners in Jurong than for owners of private homes. Fundamentally, Jurong is a precinct predominantly for HDB flats, which are more affordable for Asian professionals and blue-collar workers, including Malaysians working in Singapore. Further development of the Jurong area will increase its resident and visitor mass, hence compromising tranquillity. But it is not essential for HDB flats to offer an exclusive living environment. Convenience and excitement will be key selling points for HDB flats. But for private homes, there are always two diverse profiles of buyers - comprising of those who value an exclusive neighbourhood, and those who prefer up-and-coming, exciting localities attracting heavy footfalls. The reduction in tranquillity in Jurong will inevitably discourage the first group of private residential property buyers.
Much overlooked amid the excitement…. some loss of tranquillity in Jurong?
The accompanying new developments following the HSR will definitely further enhance the attractiveness of the Jurong area. However, whenever there is a massive development, it could be a boon or a bane for the locality – a boon because added infrastructure and developments amount to more commuters, shoppers, and greater catchment for businesses in the territory, especially shops. It may however be some sort of bane, with the sacrifice of tranquillity. Additionally Jurong Country Club, which contributed to almost the last key bits of greenery in Jurong amid rampant developments there, will be cleared.
Owners in Jurong East and Lakeside will see their properties enjoy notable price appreciation, due to added infrastructure, shopping malls and other amenities. When it materialises, the homeowners who value exclusivity may however cash out their Jurong East properties eventually. More might cash out and move away to other serene locations, as Jurong embraces a larger visitor mass.
The Lakeside area is however expected to be able to maintain its peacefulness and exclusivity even if there is further development of the HSR at the existing Jurong Country Club plot. So we can expect to see homes in Jurong East area (including the area surrounding the terminus) to attract typically buyers who like the buzz, while Lakeside will appeal to property buyers emphasising an exclusive living environment.
Suburban areas may have stronger reality and more challenging software aspects to manage
Another disadvantage of more commercial buildings in Jurong is that there could be some oversupply. Principally, there is always a reality regarding all suburban locations – whether they are regional centres or small estates. This reality is that suburban areas are meant for all, including the masses. So there is just a limited extent to which that a new development blueprint can envisage. The profile of users, visitors will definitely be very mixed, no matter how beautifully the plans are conceptualised and demonstrated in the form of hardware facilities, such as new buildings. Various major corporates in financial sectors may not like to decentralise to the new non-CBD offices. Perhaps, business parks with gated park environment will appeal to them better, as they still prefer to maintain a fairly-serious image notwithstanding relocating supporting business functions.
It may be possible to plan and put in place the ‘hardware component’ in a new suburban regional centre, but there will be limited ability by the authorities to manage the software aspects, due to mixed profile of visitors and users. Yet they do impact private home buyers’ and corporates’ decentralizing decisions. In contrast, lifestyle hubs like Harbourfront and Tanjong Pagar may be easier to conceptualize and manage, as its visitor profile is generally up-market.
This article appeared in The Edge Property Pullout of Issue 680 (June 8) of The Edge Singapore.
Ong Kah Seng is a director and Alex Sun is a senior analyst at R'ST Research, a property market research firm in Singapore. The views expressed here are his own.